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S&P downgrades Deutsche; Political worries shift to Spain from Italy

* The European Commission proposed the creation of two financial vehicles funded with a combined €55 billion to boost EU member states' reforms and recovery from financial crises.

* Emerging geopolitical risks, the reemergence of asbestos, cyber threats arising from new technologies and the erosion of risk diversification are some of the key problems facing the insurance and reinsurance industry, according to Swiss Re's latest SONAR report.

UK AND IRELAND

* Dutch insurer Achmea BV completed the sale of its Ireland-based unit Friends First Life Assurance Co. Ltd. to Aviva PLC, having obtained all regulatory approvals for the deal.

* Dozens of investment bankers at HSBC Holdings PLC have left the British bank in recent months, including senior managers at its top performing European private equity team, due to a lack of clear strategy over the lender's investment banking division and failure to overhaul client teams, insiders told Reuters.

* U.K. insurance brokers are facing further pressure from British regulators and their own professional indemnity providers about the insurers with whom they place their business, following the high-profile collapse of Denmark-based Alpha Insurance A/S in May.

* British banks could see price caps imposed on overdraft fees by the Financial Conduct Authority, which said the banks had made £2.3 billion in revenue from "poorly understood" overdrafts.

* U.S.-based private equity firm Warburg Pincus LLC acquired Legal & General Group PLC's 26% stake in Mumbai-based IndiaFirst Life Insurance Co. Ltd. for 7.10 billion Indian rupees, sources told The Economic Times.

* Irish lender Permanent TSB Group Holdings PLC has started shortlisting bidders for the sale of its €2.2 billion portfolio of residential mortgages, with U.S.-based Lone Star and Oaktree understood to have made the final round, the Irish Independent reported.

* Irish Finance Minister Paschal Donohoe said the liquidation of Irish Bank Resolution Corp. Ltd., formerly known as Anglo Irish Bank, should be "substantially completed" by 2022-end and is expected to cost between "€291 million and €306 million," The Irish Times reported.

GERMANY, SWITZERLAND AND AUSTRIA

* S&P Global Ratings downgraded the long-term issuer credit ratings of Deutsche Bank AG and its core units to BBB+ from A-, saying the bank's new strategy envisages a deeper restructuring than previously expected. The downgrade comes after the U.S. Federal Deposit Insurance Corp. added Deutsche Bank Trust Co. Americas to its list of "problem banks." Shares in Deutsche closed down 7.2% to a record-low close of €9.16 per share yesterday. Deutsche said the parent entity is "very well capitalized."

* Meanwhile, Deutsche Bank is expected to face criminal charges similar to Australia & New Zealand Banking Group Ltd. over "alleged cartel conduct" in relation to a 2015 share issuance, in which the German lender was one of the underwriters, along with Citigroup Inc.

* A Credit Suisse Group AG spokeswoman told Reuters the Swiss lender will cut about 15% of its 60-person workforce of New York- and London-based rates traders to allow the bank to reinvest in its electronic platform.

FRANCE AND BENELUX

* BNP Paribas SA is planning to cut 91 international retail banking posts in its Paris-based subsidiary that deal with activities outside its key European markets or on behalf of its U.S. unit BancWest, with the employees to be offered other jobs in the region, Reuters reported.

* Groupe BPCE head François Pérol said the bank could expand in Europe as the banking union takes hold, Les Echos reported.

* The head of the CM11-CIC group within Crédit Mutuel, Nicolas Théry, was elected chairman of Confédération Nationale du Crédit Mutuel, at a meeting which was boycotted by Crédit Mutuel Arkéa, La Tribune reported.

* U.S.-based Navigators Group has been granted a license from the Belgian regulator to sell insurance in the EU from Antwerp, De Tijd reported. The group, which had been looking for a new European base after the Brexit vote, bought Antwerp-based insurer BDM-Asco last year.

* Union Bancaire Privée UBP SA will acquire Carnegie Investment Bank AB (publ)'s Luxembourg-based private banking subsidiary, Banque Carnegie Luxembourg SA. The financial terms were not disclosed.

SPAIN AND PORTUGAL

* Spain's prime minister, Mariano Rajoy, is set to be forced out in a no-confidence motion today after a regional party said it would support the vote that aims to install the Socialist Party's Pedro Sánchez as his replacement.

* Norges Bank, the bank that manages Norway's sovereign fund, has become Banco de Sabadell SA's third-largest shareholder, Europa Press reports. Meanwhile, U.S. fund Artisan Partners Asset Management has become Bankia SA's second-largest stakeholder after the Spanish state.

* New Millennium BCP CEO Miguel Maya said he hoped dividends could be paid in 2019; Jornal de Negócios and Dinheiro Vivo reported on his comments.

ITALY AND GREECE

* Italy has agreed to a coalition government, which is due to be sworn in today, BBC News reports. Prime Minister-designate Giuseppe Conte presented his list of ministers to President Sergio Mattarella for the second time, after the latter rejected Conte's original choice for economy minister.

* French bank Credit Agricole is seeking growth in Italy, a senior executive told Il Sole 24 Ore.

* Banco BPM SpA intends to offload part of its debt collection unit to complete its plan to reduce soured loans in 2018, insiders told Reuters. A sale process is expected to begin in the coming weeks, according to one of the sources.

* Greek lender Alpha Bank AE reported a year-over-year increase in its first-quarter after-tax profit attributable to shareholders, to €65.2 million from €48.1 million.

* National Bank of Greece SA reported profit after tax of €34 million in the first quarter, up from €13 million in the same period of 2017.

NORDIC COUNTRIES

* Arion banki hf. set the price range for its proposed IPO between 68 Icelandic krónur and 79 krónur per share.

* DNB ASA has formed a cooperation partnership with the IOTA Foundation to drive innovation in areas including the Internet of Things and decentralized data marketplaces. An area of focus is blockchain.

EASTERN EUROPE

* The Russian central bank offered JSC Avtovazbank a loan of about 350 billion Russian rubles in April so the lender could pay back its debt to parent PAO Promsvyazbank and possibly to purchase its problem assets, which will be later transferred to the noncore assets fund that is being set up by the regulator, Kommersant reported.

* The value of assets that will be transferred from Avtovazbank and Promsvyazbank to the central bank's noncore assets fund will amount to 315 billion Russian rubles, Kommersant also reported. Otkritie Financial Corp. Bank and National Bank Trust PJSC will transfer to the fund 539 billion rubles and 332 billion rubles, respectively, while 745 billion rubles and 139 billion rubles will be transferred from JSC Rost Bank and B&N Bank. Prime reported that the Russian central bank intends to transfer some of the noncore assets fund's shares to Otkritie.

* PJSC Asian-Pacific Bank, the financial recovery of which is overseen by the Russian central bank's banking sector consolidation fund, could be sold through a competitive process by the end of 2018, news agency Prime reported.

IN OTHER PARTS OF THE WORLD

Asia-Pacific: Hong Kong fines Hang Seng Bank unit; Nippon Life buys stake in MassMutual Japan

Middle East & Africa: UAE's Abraaj faces wind-up petition; Kenya to probe banks over stolen funds

Latin America: Brazil fund completes Banco do Brasil stake sale; BancoEstado names CFO

NOW FEATURED ON S&P GLOBAL MARKET INTELLIGENCE

UK brokers could shun unrated, overseas insurers after latest collapse: Brokers are facing further pressure from U.K. regulators and their own professional indemnity providers about the insurers with whom they place their business, after the collapse of taxi driver underwriter Alpha Insurance.

Beazley to split its biggest unit from 2019: A company spokesperson confirmed the division of the Lloyd's insurer's $1.29 billion specialty business, with an analyst calling the move "a clear incremental positive."

Financial regulator considers price cap for bank overdraft fees: The Financial Conduct Authority's review of high-cost credit outlines restrictions on rent-to-own and home-collected credit, too.

Ben Meggeson, Ed Meza, Danielle Rossingh, Gerard O'Dwyer, Beata Fojcik, Yael Schrage, Brian McCulloch, Praxilla Trabattoni and Helen Popper contributed to this report.

The Daily Dose has an editorial deadline of 7 a.m. London time. Some external links may require a subscription. Links are current as of publication time, and we are not responsible if those links are unavailable later.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.